Splitting ownership of house

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Splitting ownership of house

Postby gardenlaw » Wed Jan 26, 2011 9:47 am

My wife and I own our house as probably 90% of couples do as joint tenants. This means that when one of us dies the survivor automatically inherits the house nomatter what our Wills say. I have been reading that we could split the ownership legally in two and then leave our respective half shares to our children. This is "severing the joint tenancy". Then if one of us died and the survivor could not cope and went into a care home the half of the house owned by the one who died would be protected from fees.

Is this a good idea or is it risky to the one left especially if they never needed care?
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Re: Splitting ownership of house

Postby Mojisola » Wed Jan 26, 2011 12:38 pm

If you do this you also need to rewrite your wills and set up a trust so that, on the first death, the ownership of half the house doesn't pass directly to your children and the right of the surviving spouse to stay in the house is maintained. The trust should also allow the survivor to move house if necessary.

If the survivor does need long term care then she/he will only have the value of half the house to fund it. This may be worth the gamble - only a small percentage of people need residential care. Also part of the weekly cost will be paid by pensions and attendance allowance so the capital will only be needed to make up the difference.
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Re: Splitting ownership of house

Postby despair » Wed Jan 26, 2011 2:09 pm

I agree

You both need to have Nil rate band loan IHT trust wills drawn up that way the other person has the remaining part of the house /estate on loan until their death

this protects both ways from care home fees and IHT
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Re: Splitting ownership of house

Postby gardenlaw » Thu Jan 27, 2011 9:46 am

Mojisola's idea sounds simpler than a discretionary trust. We will not have an IHT worry now that the survivor can have the benefit of the spouses Nil Rate Band ie leave £650,000 at today's rates. But I do worry about what would happen if one of the children died before me. Someone from another family might inherit part of our house. I know the will could say there is the right for the survivor to live there but it could be very stressful for them.
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